Central banks around the world have had hawkish, unfavorable views towards cryptocurrencies. However, the Spanish Central Bank, Banco de Espana (BDE), stands as a striking contrast. The regulator has released a report in which it states that the use of digital currencies, especially when there is a digital version of the state currency, will help in making the monetary policy of the country better. It further stated that such currencies could assist in improving the existing financial infrastructure of the nation.
Making Positive Changes in the Spanish Economy
Director General for Economy at BDE Galo Nuño said in a report that the use of cryptocurrencies could have a positive impact on the economy. The report focuses on the fact that the use of digital coins and the underlying technology, blockchain, could help in tracking the nation’s money supply more effectively, as the BDE currently cannot track all currency notes and coins accurately.
The document, however, doesn’t explicitly state the broader impact that Spain will experience if virtual currency is adopted. The document only touches the subject from the surface and talks about the “potential consequences and implications” to keep the financial system stable if they are implemented.
The report specifies that favorable impact could only be experienced with central-bank-issued digital currencies (CBDC). Apparently, the bank isn’t open to letting a set of global developers decide which way the currency swings and how it is changed and improved over the years.
Nuño has been assigned with the task of exploring the “principle motivations for which a number of central banks are currently investigating the potential consequences of introducing such instruments.”
Managing Interest Rates with Blockchain
The document also suggests that central banks have to increase the money supply by printing new paper bills regularly. However, shifting to blockchain will help in managing interest rates and money supply better. The nine-page report is also cautious of the fact that traditional banks do not fully comprehend the cryptocurrency sector.
The governor of BDE, Luis Maria Linde, said in May that cryptocurrencies have more risks than benefits. She also said:
“[Cryptocurrencies] have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities in many cases.”